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Monday, November 27,2006

USDA official outlines expanding biofuels industry

by WLJ
The federal agriculture official in charge of rural development said last week that changes need to be made in government policies to make it easier for people in rural areas to invest in ethanol and biodiesel plants. Tom Dorr, undersecretary for rural development for USDA, said rural America has significant wealth to invest in the rapidly expanding ethanol and biodiesel industries but regulations, tax policies, and technology in rural areas don’t make it easy. The big question, he said, is: How can individual producers and rural neighbors, cooperatives and other rural entrepreneurs capture the value when big companies start to move in? “It’s not the big guy versus the little guy, measured in money,” he said. “It’s the smart and quick guy versus the fellow who never gets off the dime.” Farmers and others living in rural areas own $1.9 trillion in assets including farm land, ranches and forests, Dorr said. USDA statistics indicate that about $1.7 trillion is free of debt. That’s a tremendous untapped source of capital that could be invested, which would help keep resources in rural areas rather than see them leave as they would if large corporations owned the plants, Dorr said. For example, he said the developer of a $150 million ethanol plant would need to get investors to put up $60 million that could be borrowed against for the project. “Today in New York, you could get it in one check and in Des Moines, you could probably get it in three checks,” he said. In a rural community, it would likely take 5,000 or 6,000 transactions, he said. “That’s not efficient. We need to figure out how to mitigate the transactional cost that enables rural people to invest in these,” he said. Changing some tax policies and regulations could help, he said. The government could also offer technical assistance to help set up businesses, including franchises, cooperatives, limited liability corporations or partially owned subsidiaries. There’s little doubt that the value in biofuels is there, Dorr said. He used the example of an ethanol plant in 2003 in which initial investors bought shares at $1,000 each. A month ago, some of those investors were selling those shares at $10,000 each. “It’s about figuring out how to leverage the private capital that’s out there, capturing this wealth and keeping it in those rural communities,” he said. “The business opportunity is there and the money is there. The key is to access information and confidence building to get potential rural investors off the sidelines and into the game.” Dorr, a Marcus, IA, farmer before he accepted appointment to the USDA post by President Bush, brushed aside skepticism about whether the biofuels industry bubble would burst at some point, leaving investors with losses. “Clearly there has been a major commitment by not just the government, but the private sector, by the research community and by the investment community, in renewable energy,” he said. “All I’m encouraging people to do is to look at mechanisms to make it possible for rural citizens to invest in these to capture some of that wealth.”

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Monday, November 27,2006

Placements drop in October

by WLJ
— Cattle on feed numbers remain record high. — Marketing rate a disappointment. The Nov. 1 cattle on feed report from USDA again showed record high numbers of cattle in U.S. feedlots. According to USDA calculations, there were 11.95 million head of cattle on feed at the first of the month, up 4 percent from last year. That figure is the highest recorded since USDA began the data set in 1996. The number of cattle on feed was mostly inline with analysts’ pre-report estimates. “Cattle on feed increased 2 percent less than normal from October 1 to November 1,” said Andy Gottschalk at HedgersEdge.com. “This pattern will prove to be beneficial to the market midway through the second quarter of next year. A continuing trend toward lower placements this month will only reinforce that potential benefit.” However, the placement number at 2.43 million head was the second lowest October number since the data series began in 1996 and was well below analysts’ guesses. The October 2006 placement level was 13 percent below last year and 10 percent lower than 2004. After the report was released, analysts predicted that the lower number of placements would support the market next year. Placements in all weight classes of cattle were down, but heavyweight placements showed the largest declines from last year, largely due to advance marketings and drought which forced feeder cattle into feedlots earlier than normal this year. Placements of cattle under 600 pounds were down 5.5 percent from last year. Cattle placed in the 600-699 pound range and those in the 700-799 pound range were 18 percent lower than last year. Heavyweight placements of cattle, over 800 pounds, were down 13 percent from year ago levels. The trend was also expected to be supportive of the overall market picture next year, as the lighter placement weights allow more flexibility in how and when cattle are marketed by feedlots. According to Len Steiner and Steve Meyer, analysts with the Chicago Mercantile Exchange (CME), the placement rate was directly impacted by the higher grain prices which started climbing sharply last month. That climb has probably slowed feedlot purchases of feeder cattle this fall. “It certainly appears that feed costs may be having an effect on the decision process this year,” they said. “Corn in the Texas panhandle cattle feeding region last week at $3.82 per bushel. That compares to $2.15 per bushel one year ago and $2.71 per bushel as recently as September 1. It that doesn’t affect some decision making, we’re not sure what will!” Marketings, as reported by USDA, were the single biggest disappointment in the report. At only 1.8 percent above last year with the help of an extra marketing day, the marketing rate for fed cattle during the month of October was actually behind last year's levels. The decline, mostly a result of lackluster beef demand and high retail prices, has boosted steer and heifer carcass weights to all-time record levels. Although steer weights have started to decline seasonally, last week’s heifer carcass weights were still at their peak levels. The additional carcass weight is adding to the heavy supply and packers are having a difficult time clearing inventory. Analysts last week said they expected carcass weights to continue to trend lower as is typical this time of year. High feed grain prices, particularly corn, are expected to hasten the decline in weights as cattle feeders work to limit the costs associated with feeding already expensive cattle. One possible method of reducing feed costs is wheat pasture grazing, although high wheat prices this year and slow growth progress may limit the availability of its use this year. According to Steiner and Meyer, the number of cattle moving out of feedlots onto wheat pastures this year has been lower than normal. “We have been concerned that Other Disappearance could grow dramatically this fall if wheat pasture conditions were favorable. USDA’s weekly crop progress report...shows wheat emergence is ahead of last year and the five-year average in Texas but trails those two measures in Oklahoma and Kansas,” they said. “Other disappearance was in fact considerably higher (23,000 head more) than last year, but that is more a function of low disappearance in October 2005.” They said the level of disappearance this year is close to normal and does not indicate a large movement of cattle out of feedlots to wheat pasture grazing. They called the movement at present a “non-factor” for the current cattle market. On the CME cattle contracts, last Monday, in fact, behaved much as expected. Live cattle were largely mixed, with near-term contracts trading slightly lower. Deferred months, however, moved higher in the day’s session. Feeder cattle contracts were sharply lower after a rally the prior week. Early last Monday, corn prices surged after news that Argentina halted export shipments of corn. That sent feeder cattle contracts tumbling to trade near contract lows. Canadian cattle on feed report It was also reported last week that north of the border, Canadian producers have been ramping up their beef production. Since regaining access to a good portion of its international market, Canadian production has been on the rise. According to CanFax, Canada's current cattle on feed numbers for feedlots in Alberta and Saskatchewan totaled 1,001,473 head on Nov. 1. This was 10.1 percent more than one year ago and 6.8 percent more than two years ago. The last time the cattle on feed number was above the one million mark was in April of this year. The number of cattle placed on feed during October in Canada declined 2.1 percent from a year ago to 315,130 head. This was also down 15.5 percent from two years ago. During October, fed cattle marketings totaled 186,166 head. This was up 16.9 percent from last year and up 13.6 percent over two years ago. — John Robinson, WLJ Editor  

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Monday, November 27,2006

Fed cattle trade moves higher

by WLJ
— Drop in corn boosts feeders. Fed cattle trade continued its trend of early trade last week. Good numbers of cattle were sold in Texas, Kansas and Nebraska last Tuesday at $88 live, up $1 from the prior week, and $138-139 dressed basis, up $3-4 from the prior week. USDA estimated the trade volume on Tuesday at more than 86,500 head. The increase in packer offers was somewhat of a surprise and fueled mostly by an increase in demand from consumers for the post Thanksgiving holiday buying period. That demand helped move the cutout value higher in Tuesday’s trade and allowed packers to pay higher prices for cattle to secure their supply for the week. The Choice boxed beef cutout value rose $1.40 last Tuesday to trade at $142.05 and Select rose $1.09 to trade at $128.90. Even at the higher prices, packers were still in the red, losing an estimated $9.50 per head, according to HedgersEdge.com calculations. Last week, buyers at the wholesale level were willing to pay more for chuck and round items, which are on the rebound now that the chicken and turkey prices have started to move higher. Demand for Choice middles also continues to maintain its strength, adding support to the cutout value. Last Tuesday, Choice primal loin was trading at $217.25 and Choice rib primals were also strong, trading at $254.94, mostly steady with the prior week as a result of year-end advance buying. Once that demand is met however, market analysts caution there could be a downturn in both, leading to a lower cutout value. In an effort to meet the demand, packers were still moving chains along at full speed. Harvest on Tuesday last week was estimated at 130,000 head, up 2,000 from the prior week and 1,000 from 2005. For the week, as of last Tuesday, packers had slaughtered 258,000 head, up 1,000 from the prior week and 5,000 from a year earlier. As expected, the Nov. 1 cattle on feed report played little role in fed cattle trade last week. The report came in mostly within analyst's expectations. The single biggest disappointment could have been the marketing rate. Although marketings were higher than a year ago, it was only as a result of the addition of one marketing day. The lagging rate of fed cattle marketings can be seen by the number of cattle on feed more than 120 days. “The average daily fed cattle marketings were down 3.1 percent last month. November marketings may improve, however, as slaughter in recent weeks has increased over year-ago levels,” said University of Nebraska Agricultural Economist Darrell Mark. The slower than expected marketing rate in October led to a 15 percent increase in the number of cattle on feed more than 120 days compared to 2005. Mark said the increase in front-end supply could lead to price pressure in the weeks ahead. “Likely, fed cattle prices during December and January will be affected by the aggressive placements of light weight feeder cattle earlier this year,” he said. “Still, fed cattle prices are expected to be in the mid- to upper $80s for the next several months. Beyond that, lower placements in October are favorable to the deferred fed cattle markets, and should help support prices in the mid-$80s until next summer.” The futures market seems to also hold the same sentiment. Nearby live cattle contracts on the Chicago Mercantile Exchange (CME) were slightly higher as a result of the uptick in last week's cash trade in Wednesday's session. Deferred months were also showing good gains. December live cattle contracts were up 12 points to $88. February traded even with the previous day at $90.92, April was up 10 points at $91.55, while June and August were both up 22 points, trading at $88.30 and $87.10, respectively. Feeder cattle Like the fed cattle markets last week, feeder cattle also moved higher as a result of a pause in the climbing grain markets. December corn at mid-day on Wednesday was trading 2.5 cents lower at $3.58 a bushel, down 8 cents from the prior week. Although corn price objectives are still upwards of $4 per bushel, feeder cattle buyers used the temporary slowdown in corn prices to bid feeder cattle higher. The CME cash feeder cattle index last week was $98.69, nearly $1 higher than the prior week and feeder cattle futures were also rising in mid-day trade last Wednesday. The January 2007 contract was trading 62 points higher at $99.40 and March was up 27 points to $98.30. April feeders traded up 30 points and May was trading up 45 points to $98.80 and $99.20, respectively. In auction markets, the good news in fed cattle and grain markets also helped ease cash prices higher last week in several markets. Prices in the central Plains were mostly higher. In the south, some Texas markets showed some slight weakness, while farther north prices were mostly higher despite corn prices that are nearly double last year's price. In Three Rivers, TX, last week, feeder steers sold steady to weak. Feeder heifers were weak to $4 lower on active trade and good demand. In Oklahoma City, OK, some additional rainfall and adequate wheat conditions added to buyer morale and prices were moderately higher last week. Feeder cattle sold for steady money, while steer and heifer calves were called $1-3 higher. Demand was good for all weights and buyers were not as selective as they have been during the last few weeks. The day's run included several program calves (value added) all certified to at least 45 days weaned and with all their shots. Quality was reportedly average to attractive with several long weaned calves included. In Joplin, MO, compared to the prior week, steers sold $2-3 higher. Heifers sold $3-6 higher with 400-600 lb. cattle as much as $8 higher. Demand and buyer attendance was good with active bidding. Quality of calves was called average to good with several loads of top quality yearlings, a rarity in most markets these days. In Loup City, NE, compared to the prior sale two weeks earlier, feeder calves less than 600 lbs. trended $4-5 higher, while those over the 600 lbs. traded closer to steady. Cattle quality and buyer demand were reportedly good to very good. In Mitchell, SD, last week, compared to the sale two weeks prior, feeder steers and heifers traded $2-4 higher. Demand was called very good on an active market. Farther to the west at Billings Livestock Commission in Billings, MT, steer and heifer calves were reportedly fully steady, with the exception of heifers in the 500-550 lb. class, which were called $5 lower. Demand at the market continues to be good and quality remains very attractive. In Davenport, WA, compared to the prior Monday at the same sale, feeder cattle were reported to be steady to firm in a light test. Trade was called moderate with light to moderate demand. In Famoso, CA, prices were widely mixed compared with the previous sale. Lighter weight calves were mostly lower, while heavier weights were steady to higher. Steers in the 400-500 lb. range were $85-110. Heifers in the same class were $80-94. Steers in the 600-700 lb. weight class were $85-91.50; heifers were $78-86.25. Heavyweight steers 800 lbs. and up traded for $80-86 in last Monday's sale. — WLJ  

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Monday, November 27,2006

Angus Foundation launches five-year education campaign

by WLJ
Unveiled at the Angus Foundation Supporter Recognition event Nov.11 in Louisville, KY, the “Vision of Value: Campaign for Angus” aims to significantly expand the ability of the Angus Foundation to support education, youth and research activities by raising $11 million by Dec. 31, 2011. This is the first capital campaign undertaken by the Angus Foundation, the not-for-profit affiliate of the American Angus Association that was established in 1980 to support education, youth and research programs in the Angus breed. To date, more than $2,460,000 has been committed to the campaign during the quiet phase, which began Oct. 1, 2004. “The Vision of Value: Campaign for Angus” will benefit everyone in the Angus industry, including breeders and commercial producers, friends of the breed and allied industry partners,” says Howard Hillman of Bon View Farms in South Dakota, who serves as chairman of the Angus Foundation’s campaign leadership cabinet. “Through this fund raising effort, the Angus breed will be empowered to continue its prominence in the beef cattle industry,” Hillman says. “Educational programs will grow, youth opportunities will expand, and research will advance.” The “Campaign for Angus” will raise $3.5 million to fund education programs, $6 million to further support Angus youth, and $1.5 million to bolster research activities. Education Opportunities for continuing education empower Angus breeders of all ages to develop technical expertise and refine leadership skills. The Campaign for Angus aims to raise $3.5 million for educational activities that add value to the Angus breed’s future. Existing programs such as Cattlemen’s Boot Camp will grow with increased support, and new programs will be created. Educational conferences, short courses, seminars and other instructional opportunities will be established to help breeders stay abreast of Angus and beef industry issues. Youth More than 10,000 members of the National Junior Angus Association (NJAA) are developing character, communication skills and leadership abilities that will prepare them to be the future leaders of the Angus industry. The “Vision of Value: Campaign for Angus” will boost the Angus Foundation’s financial support of NJAA activities for these youth, enabling them to receive increased access to these valuable opportunities. With the fund raising goal of $6 million, additional leadership training will be offered, and scholarship programs will be enhanced to help more Angus youth realize their dreams of higher education. Research By continuing to fund innovative research, Angus producers will gain the competitive edge that increases their productivity and profitability. The “Campaign for Angus” will raise $1.5 million for research, allowing all members of the Angus industry to invest in their own future by funding studies that address important issues affecting them. Future research funded by the Angus Foundation could include areas such as nutrition, forage production, reproduction, food safety, carcass evaluation, marketing and economics, herd health, genetics and consumer awareness. “This is a tremendous opportunity for members of the Angus industry to invest in their future, because the “Vision of Value: Campaign for Angus” will support programs benefitting all of us,” says Angus Foundation President Milford Jenkins. “The campaign’s successful completion is an investment responsibility that we all share. Support is needed from all stakeholders in the Angus industry to achieve the $11 million campaign goal by December 31, 2011.” Gifts to the Angus Foundation’s annual fund drive, which is mailed mid-November to all members of the Association, will count toward the campaign goal. For other giving options, contact the Angus Foundation staff at 816/383-5100, or donate online by Visa or MasterCard at www.angusfoundation.org. In addition to Hillman and Jenkins, the “Campaign for Angus” is led by Jim Coleman, Vintage Angus Ranch in California, and David McMahon, Belle Point Ranch in Arkansas, who serve as honorary co-chairs of the Angus Foundation’s campaign leadership cabinet. Other members of the campaign leadership cabinet include: Dick Beck, Three Trees Ranch in Georgia; Klaus Birkel, Camp Cooley Ranch in Texas; Mark Gardiner, Gardiner Angus Ranch in Kansas; Pat Goggins, Vermilion Angus Ranch in Montana; John Morgan, Morgan Angus in Georgia; Abbie Nelson, Five Star Land & Livestock in California; Bob Norton, BioZyme Inc. in Missouri; Blanford Pierce, Woodlawn Farms in Illinois; Anne Patton Schubert, Kentucky, representing the American Angus Auxiliary; Ron Simek, Canyon Creek Angus in Wyoming; Eddie Sydenstricker, Sydenstricker Genetics in Missouri; Jake Tiedeman, Nebraska, former chairman of the NJAA Board of Directors; Bob Weaver, Weaver Angus Farm in Illinois; and Laurie Widdowson, Sand Point Cattle Co. in Nebraska.

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Monday, November 27,2006

Annual conservation meeting presents innovative programs

by WLJ
Alternative crops to reduce irrigation water use, science credits for high school students attending conservation camp, funding for conservation from oil and gas companies, subdivision reviews with teeth for conservation—these are a few of the innovative conservation programs shared at the Colorado Association of Conservation District’s (CACD) annual meeting in Glenwood Springs, Nov. 13-16. Colorado’s Heartbeat: Agriculture, Water & Energy, was the theme of CACD’s 62nd annual meeting held at the Hotel Colorado, home of conservationist Teddy Roosevelt’s White House in the West. Larry Hoozee, CACD president from the Morgan Conservation District, said, “Conservation districts are preparing for the 2007 Farm Bill. Conservation programs were a major emphasis in the 2002 Farm Bill, but we did not achieve adequate funding to carry them out.” “Colorado’s conservation districts plan to partner with agriculture and environmental organizations to work toward profitability in agriculture, incentives for conservation, and programs for wildlife and forestry,” said Hoozee. CACD assists Colorado’s 77 conservation districts in providing leadership for the conservation of natural resources in Colorado including soils, water, air, plants, and wildlife. Russell George, director of the Colorado Department of Natural Resources, gave the keynote address. “We established water basin roundtables in Colorado to bring factions together to discuss water issues,” said George. “Increasing population and use of water has us in a crisis of finding ways to create new water supplies to meet demands. The so-called people drought is now more common in Colorado than Mother Nature’s droughts.” Olin Sims, president-elect of the National Association of Conservation Districts (NACD), spoke about the goals for the proposed 2007 Farm Bill. NACD is working with farm and commodity groups and environmental organizations in Washington, D.C., to help Congressional leaders draft a quality farm bill. “Our goals are to insure profitability in agriculture, provide for adequate technical assistance to help landowners install conservation practices, provide for easy access to farm programs, and a balance between working agricultural programs and land retirement programs,” said Sims. Callie Hendrickson, executive vice-president of CACD, thanked the supervisors for their work with legislators to reinstate the Natural Resources Conservation Matching Grants program. Conservation districts now have $600,000 annually through the Colorado State Conservation Board to hire conservation technicians to assist with Farm Bill conservation activities and to distribute grants to districts for innovative conservation programs. A highlight of the CACD annual meeting was the awards banquet the evening of Nov. 13. Bernard and Linda Gordon, who farm 3,400 acres of cropland and manage 3,900 acres of rangeland in the Double El Conservation District, were honored as CACD’s Conservationists of the Year—Farm Division. The Gordons utilize residue management and no-till to reduce soil erosion and save water on croplands. They adopted cell grazing systems to effectively manage grazing on rangelands, and they’ve planted over 7,000 trees for windbreak and shelter belt protection, helping wildlife and livestock to thrive on their lands. Perry Handyside, manager of the Blue Valley Ranch near Kremmling, CO, was honored as Conservationist of the Year in the Ranch Division. The ranch, owned by Paul Jones, is composed of 24,000 acres of rangeland, forests, and agricultural lands within the Middle Park Conservation District. Handyside said, “Our mission is to preserve open space, maintain a healthy, functioning rangeland, demonstrate holistic resource management, and raise high quality commodity products including hay, bison, and beef,” Handy said. Projects are underway to improve fisheries by installing weirs in the river and stocking rainbows, brookies, browns, and cutthroats. The conservation districts also honored Sen. Jim Isgar, Hesperus, CO, Rep. Kathleen Curry, Gunnison, CO, and Rep. Bernie Buescher, Grand Junction, CO, as CACD’s Legislators of the Year for their efforts in securing matching grant funds for conservation. Dee Blue of Carbondale, CO, received the CACD Distinguished Service Award. Blue served on the Mount Sopris Conservation District for 24 years. She represented the Colorado watershed on the Colorado State Conservation Board. Blue was also instrumental in developing the Agriculture and Conservation Education Project at the Silt Branch of the Garfield County Library. Danny Neufeld of the Center Conservation District received the CACD Outstanding Supervisor award. During his six years of service, Neufeld has traveled some 30,000 miles and donated almost 2,000 hours of time to conservation. His achievements include helping to organize the Rio Grande Water Festival and helping to establish the Center Conservation Distict’s Weed Control Service. He represents the Rio Grande River Watershed on the Colorado State Conservation Board. CACD also honored the Center Conservation District as Outstanding Conservation District of the Year. Some of their projects include the Beaver Creek conservation camp, San Luis Valley Regional Science Fair, Snotel installation, two members participating in the Colorado Conservation Leadership Program, and irrigation water management workshops. The Colorado State Conservation Board honored the Shavano Conservation District as the Conservation District of the Year. The Shavano Conservation District has been very active in conservation education and has been a prominent leader for district implemented conservation projects.

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Monday, November 20,2006

Public land grazing gains support in California

by WLJ
— Agencies are turning to ranchers to improve grasslands and wildlife habitat. California government agencies are discovering what ranchers have known for generations: Livestock grazing is beneficial for the environment. With increasing frequency, holders of large land parcels are working in cooperation with ranchers to control brush, preserve habitat, and minimize fire danger all across the state which is commonly known for antagonistic environmental policy. “For whatever reason, it’s not widely known that livestock grazing is being widely used on non-federal lands to manage plant populations in California,” said Sheila Barry, natural resources and livestock adviser for the University of California Cooperative Extension. “There are about 20 different agencies, including water districts, parks, landfill sites not in use, and even some Department of Defense and Fish and Wildlife Service properties where permits are being issued for livestock grazing.” Now, according to officials in Santa Clara and San Mateo counties on the edge of heavily populated San Francisco, livestock could also be used to reduce wildfire risks. Land management consultant Wayne Burleson said the science behind the decision is a sound one. “In order for grasslands to remain healthy, they must have disturbance to protect the soil,” he said. “The opportunities in California for ranchers to benefit from an unused, or at least underutilized, resource is a great benefit.” The Mid-Peninsula Regional Open Space District recently drafted a policy that would reintroduce the animals to an additional 5,000 acres of ground where they had previously been removed. The latest announcement is part of an ongoing trend; many California governmental landholders have been using livestock grazing as a management tool for years. According to Barry, the East Bay Parks District (EBPD), one of the Bay area’s largest landholders with 60,000 acres under management, is also among the largest users of grazing to control plant growth on approximately one-half of the parks under management. More than 7,000 animals are currently stocked on the parks alone. In addition, cattle also graze portions of San Francisco Bay National Wildlife Refuge in Fremont, as well as around San Antonio and Calaveras Reservoirs near Sunol, on property owned by the San Francisco Public Utilities Commission. Ranchers also lease ground from Stanford University, and the California State Parks system is experimenting with cattle at Pacheco State Park in Hollister, CA, where biologists are studying their impact and effectiveness. Burleson said the trend is growing, with some municipalities across the country raising taxes for urban landowners to manage open spaces which are maintained through livestock grazing. “Prescriptive grazing is a growing enterprise and a new income source for agriculture,” Burleson said. In California however, competition for grazing permits is stiff, according to Barry, who said the permits are highly coveted in an area where private pasture leases are expensive and hard to come by. Livestock grazing is being reintroduced in large part to combat the growth of brush, which in turn becomes fuel for wildfires in the late summer and into winter. Already this year, wildfires have ravaged more than 675,000 acres in the state. Only Texas, Nevada, Montana and Idaho had more acreage burned.   Burleson said livestock grazing, depending on how it is managed, can significantly reduce fire fuel and in some cases, can even create a natural fire break in areas where grazing pressure is intensified. The result can create a zone which prevents wildfires from spreading. Burleson said the practice in Montana this year saved homes during the infamous Derby Mountain fire. “There were places where ranchers allowed cattle to graze the grasslands right down to the ground, and in those areas, when the fire came thorough, it either went around or went out. A lot of structures were saved. Either way, if creating a fire break is the intent, intensive management is the key. Call it landscape design through grazing.” In California, largely as a result of the state's sprawling suburban areas, livestock grazing had been forced into remote areas and brush was allowed to grow wild. The result was encroachment by non-native brush and plant growth which quickly overwhelmed native species. “What land managers have discovered once the grazing was stopped, is that habitat for some species quickly declined in quality and some species of concern were forced out,” said Barry. "Some public agencies have tried different methods of reducing the encroachment of brush, including fire, but it has been difficult to get permits and they have found it isn’t very effective.” She said by cooperating with ranchers, state agencies have found the habitat is greatly improved for animals such as the threatened red-legged frog and tiger salamander, along with better known species like the golden eagle. Barry said studies have shown that livestock grazing is beneficial even for insects, such as the endangered bay checkerspot butterfly which depends heavily on wildflowers for its food. “Grazing is one of the few tools that is available to manage grasslands on a large scale,” Barry said. She attributed the acceptance of the California Rangeland Resolution last year as a major turning point in gaining public acceptance of grazing on public lands as a management tool. The resolution currently has nearly 50 signers who are dedicated to maintaining livestock grazing for the benefit of rangeland conservation. Barry said the key to the success of the grazing programs has been the dedication of the ranchers and their management. “Their conservation practices, which started on privately owned parcels of land, have been extended to the public ground that is being grazed. That has helped reduce conflict with the public and helped the practice gain acceptance,” she said. Even environmental groups have joined forces, according to Barry. “The EBPD held public meetings on the subject for more than a year in an effort to meet with all of the stakeholders. What they found is that other than a couple of activists who came to several meetings, the environmentalists were more concerned with making sure the right things are done rather than pushing the animals off of a pasture,” Barry said. In the end, the work done by grazing livestock has led to a setting that is agreeable to many Bay area residents. “There are a whole group of people out there who like the pastoral setting, complete with the mooing cattle. And best of all, it helps with the reduction of fire fuel,” Barry said. “Those who feel cattle don't belong are actually few and far between.” The agencies currently using livestock grazing as a management tool started out with a very clearly defined set of goals, which has helped to reduce potential conflicts. For example, water districts, which manage some remote property, are focused on water quality. According to Barry, they have been able to use livestock in an effort to clear land of brush around lakes and storage ponds, while preventing runoff and sedimentation from affecting water quality through carefully planned and managed grazing. She said conflicts, although they have occurred, have been rare. “There have been conflicts associated with dogs in some of the areas where off-the-leash activities are permitted and a few problems during calving season and even incidents involving some overly friendly bottle-raised animals which approached hikers in some of the parks,” she said. “But for the most part, the EBPD has done a very good job of managing and recording these conflicts so they can be dealt with.” Barry said by far the most common livestock used in grazing management have been cattle, but sheep and in some cases, goats, have been utilized. “Cattle are by far the most numerous, but there are some sheep and an increasing number of goats being grazed. In fact with goats, there is a growing industry in prescribed grazing. Some producers are grazing these animals and then marketing the meat to the growing ethnic population here in the Bay Area,” she said. In addition to the market for goat meat, the grazing also generates revenue for goat producers. “For the most part, if goats are being grazed, the agency using them is doing it for prescriptive reasons and they are paying for it,” Barry said. She estimates the cost at about $700 per acre. Perhaps the most encouraging part is that the practice of livestock grazing as a management practice is catching on in other parts of the state, including southern California. “The California Rangeland Resolution has caused some groups to step back and look at how they can keep land in ranching, particularly in the Central Valley, while improving the biodiversity of grasslands,” Barry said. “There has been a growing recognition about the importance of grazing. We have even seen it on ranches like the Irvine Ranch and the Mission Viejo Ranch in Orange County where they initially purchased the ranch with the intention of removing the cattle. Now there's an interest in returning cattle to the land to help manage the grasslands.” It is becoming clear to land managers in California and perhaps in some cases, even environmentalists, that livestock grazing on public lands can be managed as a tool to achieve a specific set of goals. “There are lots of challenges in the future for grazing on public lands in California,” said Barry. “But the opportunity is growing and gaining support.” — John Robinson, WLJ Editor  

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Monday, November 20,2006

Pasture and hay land insurance now available

by WLJ
Extremely dry conditions in many parts of western North Dakota during this past growing season reduced the amount of forage available for grazing livestock and hay production. The USDA Risk Management Agency (RMA) has developed a pilot insurance program for pastures and hay land for 2007. The insurance will be available from private crop insurance agents, with a closing date for sales of Nov. 30, 2006. Coverage is available for land in 24 counties: Adams, Billings, Bowman, Burke, Burleigh, Divide, Dunn, Emmons, Golden Valley, Grant, Hettinger, Logan, McIntosh, McKenzie, McLean, Mercer, Morton, Mountrail, Oliver, Sioux, Slope, Stark, Ward and Williams. A different pilot policy based on a vegetation index is available in western South Dakota, but there are no pilot programs for Montana or Minnesota. The Rainfall Index policy available in North Dakota is a single-peril policy based on lack of precipitation. National Oceanic and Atmospheric Administration rainfall data is used for the approximate 12-mile by 15-mile grids that have been identified. Producers must select at least two of the two-month periods, (February/March, April/May, June/July, August/September, October/November or December/January), called index intervals, which is when precipitation is important in the production of forage. Insurance payments are calculated based on a deviation from normal precipitation levels within the grid and index intervals. Producers can select coverage levels of 90 percent, 85 percent, 80 percent, 75 percent or 70 percent, and the premiums are subsidized by RMA at 55 percent, 59 percent and 64 percent. A productivity factor ranging from 60 percent to 150 percent also must be selected. The factor is based on a producer’s estimate of how the insured acres compare with other land in the county. The provisions of the contract are complex, so producers are urged to contact a crop insurance agent for details that are appropriate for local geographic areas. Fact sheets, policy provisions, grid locators, historical indexes and decision support tools are available at the RMA Web site at www2.rma.usda.gov/policies/pasturerangeforage. Educational presentations with details and examples for Morton and Ward counties are available on another Web site at www.ag.ndsu.nodak.edu/aginfo/lsmkt/ livestock.htm. Rainfall was below average in many of the eligible counties in 2006. For example, grid number 18138 in southwest McIntosh County recorded rainfall at 51.6 percent of normal in February/March, 60.2 percent in April/May, and 49.2 percent in June/July index intervals. Had the Rainfall Index policy been available in 2006, many western North Dakota producers with grazing and hay land may have benefitted from it.

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Monday, November 20,2006

LETTERS

by WLJ
Equal footing Dear Editor: I heartily applaud Pete Crow and his bold call to “…lose the subsidies and let the markets find their way” (Editorial, November 6). It’s clear that he is referring to the wasteful and shortsighted ethanol industry subsidies that have “artificially” stimulated corn prices which “…has placed livestock feeders at an unfair disadvantage.” I’m assuming that he also means the corn subsidies that have given livestock feeders and corporate grain giants an unfair advantage over the last several decades by keeping corn prices artificially low. Otherwise he would be just one more in a long line of ag-industry hypocrites. It is great comedy to watch the benefactors of government largesse weep and moan when the same programs come back to eat their young. And they always do. Ask any of the supposed benefactors of the original farm-aid programs: the small family farm. Oh wait, you can’t because they and their young have all been eaten by Cargill and Archer Daniels Midland (ADM). ADM, you may recall, spends millions on Sunday mornings to promote the ‘hard working family farmer.’ We can assume that is to help continue public support for farm subsidies that give ADM cheap raw materials. Then they collude with their competitors to prop up the price of the products they sell back to the farmers (remember ‘Lysine?’). Farm subsidies stink! Period. They benefit only the politically connected. They never benefit the intended. Consider the wonderful “Conservation Reserve Program” that now has nothing whatsoever to do with conservation, but is merely a welfare program for wealthy landowners (Ted Turner) and hunting clubs. Imagine how quickly we could balance the federal budget by eliminating these welfare programs for giant corporations and rich land-owners. Will it happen? Not bloody likely. Imagine the financial repercussions when land prices reflect their true value, or when cattle feeders have to pay at least the cost of production for corn. So, I join you Pete, in your call for an end to subsidies. But alas, the corporate giants and their minions at Farm Bureau will trot out their self-funded studies and prove beyond a doubt (and in spite of laws of physics) that corn-ethanol really is a cost effective energy resource. And that farm subsidies actually save money. Reasonable guys like us will never be heard above the noise. Dan Paris Little bitty cattleman  

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Monday, November 20,2006

Fed cattle trade early and steady

by WLJ
— Feeder cattle remain under pressure. Fed cattle trade broke out early last week in the northern tier states of Nebraska and Colorado along with the Corn Belt cattle feeding areas. Prices were steady to $1 higher than the prior week at $84-85.50 live and $133-135 dressed basis. In the south, there was some light trade reported last Wednesday at $85, however, once initial orders were filled, trade dropped off as the Chicago Mercantile Exchange (CME) rallied and cattle feeders held out for higher money. Feed grain prices and continuing declines in consumer movement have been equally hard on feedlots and packers in recent weeks. The result has been a steady weakening in fed cattle prices. Last week, analysts said there are more price drops in the weeks ahead. According to Mike Roberts, commodity marketing agent for Virginia Tech, the decline in demand is seasonal. “Beef demand usually eases up prior to Thanksgiving as pork and turkey demand pick up,” Roberts said. The movement of boxed beef out of packing plants has been a concern for weeks as a result of light consumer demand. It appeared last week that decline was finally taking a toll on prices at the retail and wholesale level. Movement of boxed beef was difficult and it took heavy discounting by packers to move product. Last Thursday, Choice product slipped 83 cents to $143 and Select product was down 58 cents, trading at $129.96. Analysts were predicting that prices would continue to move lower toward $140 for Choice product before any significant recovery would begin. Last Thursday, market reports indicated fairly good demand on boxed product on moderate to heavy offerings. Select and Choice chuck and rounds moved lower, while rib and loin primals were called generally steady. Beef trimmings were lower on moderate demand and moderate to heavy offerings by packers. For the week, however, despite the sloppy movement, Choice cuts were even with the previous week and Select cuts were down $2 as a result of better demand for Choice product. Packers were much closer to even money on slaughtered cattle last week than they have been in several weeks and were working through live inventory at high speed to take advantage of margins. Harvest volume for last Thursday was estimated by USDA at 128,000 head. For the week, total slaughter volume was estimated at 509,000 head, which was 7,000 more than the previous week and 42,000 more than the same week last year. Cow slaughter continues to run ahead of normal despite some expectations that it would begin to taper off now that most cull cows have been marketed. However, continued high corn prices and a serious shortage of forage and hay have ranchers looking deep into their herds for culls. Cow slaughter through Wednesday was averaging near 24,000 head per day at that level; cow cutout values continue to decline as production is exceeding retail movement. Prices for 50 percent lean are nearly half of 2005 levels as a result of the heavy volume. Last year for the same week, 50 percent lean averaged near $63. Last week, prices were averaging approximately $36 on the 50 percent lean trimmings. Until demand begins to pick up and slaughter volumes and weights begin to decrease from current levels, analysts expect pricing to remain lackluster. The November cattle on feed report, due out last Friday, was largely expected to show the start of that decrease. Average analyst estimates showed an expectation that placements would be reported in the range of 15.5 percent to 5 percent lower than October 2005. Although average estimates of number of cattle on feed ranged from 3.3 percent to 6 percent above last year, those numbers are greatly reduced from levels seen earlier this year. If the report comes in as expected, it could provide the first hope that the supply of fed cattle is coming more inline with average levels, which should provide a boost to the market next year. On CME, live cattle contracts bounced back slightly last Thursday after losing ground early in the week. The nearby December Live Cattle contract gained 140 points to settle at $88.12, which added strength to feedlots which were holding out for more money late last week. The February 2007 contract was up 155 points, closing at $90.75, and April closed up 147 points at $91.40. Feeder cattle The big story in the feeder cattle markets continues to be the high cost of corn. The surge in both cash and futures markets for corn buyers has put the feeder cattle market into a tail spin during the fall run. However, according to Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel, the skittish nature of feeder cattle markets might come to an end in the near future. “Some would say that skittish is a bit of an understatement given the slide in feeder cattle markets recently. Most feeder futures contracts have decreased $15-18 per hundredweight since mid-September,” Peel said. "Certainly there are some good reasons for feeder markets to be a bit touchy, but also there are several reasons why the current slide will not go on much longer, and may, in fact, correct a bit in coming weeks.” Peel said the end of the fall runs and the fact that a number of cattle and calves were sent to town early means there is likely to be a shortage of cattle for grazing wheat pasture this winter and next spring, particularly with wheat prices surging ahead as a result of short supplies. “Secondly, feedlots will begin to work through the current bulge of inventories in the next couple of months,” he said. “Regardless of the level of marketings, there is no doubt that October placements were small and will be followed by reduced November placements as well. Feedlot inventories should tighten up considerably by the end of the year and feedlots will again be looking for cattle to feed.” Of course, grain prices continue to be an unknown for cattle feeders, however, Peel said prices aren’t likely to continue to rise as rapidly as they have in the past two months. “Feed prices will be higher in 2007 and feeder cattle prices will be somewhat lower than expected just a few weeks ago,” he said. “However, corn prices will not continue increasing like they have recently and some of the expectations for the future will be tempered by reality.” Peel said the ethanol industry will face several hurdles that will impact the currently projected expansion. Most significant will be a lack of infrastructure, which will prevent the industry from reaching projected levels. “There are already indications of bottlenecks in ethanol plant design and construction. It will likely take longer than expected for some of the new plants to come on line,” Peel said. “Transportation issues will be more important as the truck and rail systems deal with unusual product flows and the unique challenges of transporting byproduct feeds and ethanol.” Despite the good news for feeder cattle markets in the future, last week prices continued their two month decline. The CME feeder cattle index stood at $99.77 last Thursday, down from $102.72 the week prior. Auction market prices again last week showed a sharply lower cash price trend. In Pleasanton, TX, feeder steers were $2-8 lower, with some scattered instances of as much as $10 lower. Feeder heifers were called $3-9 lower on active trade and good demand. In Oklahoma City, OK, the feeder cattle market was one of the few which was steady and in some cases, higher last week. Feeder cattle and calves over 500 lbs. were steady to $2 lower and calves under 500 lbs. were called steady to $3 higher. Demand was called moderate to good, with reports of good numbers of weaned, vaccinated and other value added options on offerings. Farther north, in Joplin, MO, steers under 600 lbs. sold $2-5 lower, 500 to 800 lb. cattle were steady to $2 lower and those over 800 lbs. were called steady. Heifers under 450 lbs. were steady, while those over 450 lbs. were $1-3 lower on moderate to light demand. In the northern tier, markets were much improved. In Basset, NE, the bulk of feeder cattle trended $3-5 higher; with 550 to 650 lb. heifers trading $5-7 higher. Quality at the sale was reportedly good with very good buyer attendance and participation. One of the highest gainers of the week was Riverton, WY. There, steer and heifer calves under 500 lbs. were steady to $2-5 with some instances of $6-7 higher on reputation quality offerings. Steers and heifers over 500 lbs. were called steady with some instances of $1-6 higher. Heifers were steady with lower undertones noted. Demand was called good with good buyer attendance. In Billings, MT, steer calves under 500 lbs. were not well tested. Those in the 500-600 lb. class were $1-5 higher, while those over 600 lbs. were mostly steady. Heifer calves were called steady to $3 higher, with a few instances of as much as $5 higher on good demand. On the West Coast, prices were mostly steady with the previous week on good runs of cattle. In Madras, OR, steers from 400-500 lbs. were steady to as much as $6 higher. Those in the 500-600 lb. range were mostly $1-2 higher and those 700-800 lbs. were also $1-2 higher. Heifers from 400-500 lbs. were steady to $2 higher, while heavier weight 500-700 lb. heifers were steady to $5 lower. In Madera, CA, stocker and feeder cattle were called steady to $3 lower in a moderate test of the market. On CME, higher trade in the live cattle pit, combined with some slight cooling in the corn market, helped feeder cattle make big gains last Thursday. The November contract was up 40 points to close at $97.62. January, March, April and May all gained 300 points on the day. January closed at $98.20, March ended at $97.12, while April closed at $97.80 and May ended the day's trading at $98.32. — WLJ  

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Monday, November 13,2006

Fed cattle trade declines $2-3

by WLJ
— Corn prices continue to pressure feeders. Fed cattle trade came early again last week at $86 live and $132-135 dressed. Those prices were mostly $2-$3 lower live and $4-$5 lower dressed basis. Texas feedlots sold 20,000 head of cattle at $86-$86.50, Kansas feedlots reported selling 11,000 head at $86 live and $1.365 dressed, Nebraska feedlots reported selling 22,000 head of cattle for $85-$86 live and $1.33-$1.35 dressed, and Colorado feedlots reportedly sold 5,500 head for $86-$86.50 live and $1.35 dressed. The decline in the cash market, along with continued declines in the futures market, is being driven by shrinking retail beef demand and larger numbers of front-end fed cattle supply. The market last week declined to its lowest point since August, which does not bode well for cattle feeders who are faced with rising costs of gain as a result of the very bullish grain markets. According to the most recent Kansas State University “Focus on Feedlot” survey, average steer and heifer weights were up significantly again during the third quarter, adding to the already large supply of beef on the market. Average steer closeout weights reported during the quarter were 1,339 lbs. compared to 1,312 lbs. last year. Heifer weights were also higher, at 1,195 lbs., up eight pounds from 2005. Compared to the five-year average, steer weights were 46 lbs. higher and heifer weights were 33 lbs. heavier. Applied industry-wide, those calculations illustrate how rapidly additional weight can impact overall beef production numbers. Last Thursday’s harvest was estimated at 125,000 head, even with week prior and year ago numbers and the week-to-date kill stood at 502,000 head. That number was 2,000 head below the previous week, but still well ahead of the prior year when 478,000 head were harvested. The large kill numbers weren’t helping the boxed beef values as slumping demand at the consumer level and lower priced competing meats continue to cause sluggish movement off of store shelves. Retail buyers have been forward contracting for rib cuts to meet holiday demand, however that hasn’t been enough to sustain cutout values. Last Wednesday, the Choice cutout closed $2.52 lower to settle at $144.34 and the Select cutout closed 28 cents lower to settle at $132.41. Sales volume was called good with 537 loads of beef sold. The Choice/Select spread settled at $11.93, a loss of $2.24. In Thursday’s trade, the cutout remained under pressure, with Choice shedding another 63 cents to trade at $143.71 and Select dropped 36 cents, trading at $132.05. The Choice cutout value is off nearly $5 since the end of October. Select product is down more than $3 in the same time period. Packers have been faced with a build up of inventory, particularly in the slow moving end meats, and have had to offer big price breaks in order to keep it moving in the pipeline. Last week there were also some discounts in the Choice loin primal, which had been critical in maintaining cutout values. Analysts last week said if this discounting continues, it is a sure sign that both cutout values and fed cattle prices will continue to slide. The cow beef cutout also came under pressure last week as a result of the heavy supply on the market. Cow carcass cutout value dropped more than $2.50, from $104.03 on Monday last week to $101.40 on Thursday. Slaughter increases this fall have been largely in the area of cow and bull slaughter because of the drought. These increases in cow beef caused the cow carcass cutout value to decline last week. The 90 percent lean boneless beef prices dropped nearly $3.50 in the first half of the week. The 50 percent fed cattle trim traded mostly steady during the same time period. On the Chicago Mercantile Exchange (CME), live cattle contracts were mixed in last Thursday’s session. December was up 42 points at $85.87, February was down 10 points to $89.10, and April was up two points at $89.75. For the week ending Thursday, live cattle contracts were steady to slightly higher in mostly light trade on CME. The next important event for contract trade will be the release of the cattle on feed report, due out on Nov. 17. Feeder cattle Feeder cattle prices continue to be pressured by strong grain prices and contract trade on the CME last week made new contract lows, particularly in the deferred months. Despite the pressure, there was some price correction in the contract trade last Thursday, with feeders moving higher across the board. November was up 152 points to $100.47. January was up 167 points to settle at $96.37 and March was up 145 points, closing at $95.20. Last Thursday’s CME cash index declined $1.28 to settle at $101.44. Cash prices at auction markets for the week were lower across most of the western U.S. despite lower than normal receipts for this time of year. Last Thursday’s CME cash index declined $1.28 to settle at $101.44. Many feeder cattle were marketed early this year and the decline is apparent at most markets. Health concerns also played a role in last week’s market slide. Weather conditions have been highly variable in much of the Plains and intermountain region this fall and the wide swings in temperature have buyers very cautious about the health and background of their prospective purchases. Buyers were particularly selective last week, showing heavy preference for cattle and calves which had been weaned and vaccinated. Loud lots fresh off the cow were discounted heavily. Although grain prices have been hanging heavily on the feeder cattle market, there is some positive news for southern Plains operators. Rain last week came at a good time for the wheat crop and grazing conditions have reportedly improved across parts of Oklahoma and Texas for stockers and backgrounders. This hasn’t stopped the price slide in the cash market, but is has perhaps moderated the decline, according to market reports. In Amarillo, TX, last Tuesday, compared to the prior week, feeder steers and heifers were mostly $3-6 lower, with some instances of as much as $10 lower. Oklahoma City, OK, prices were $2-5 lower last week on lighter than normal receipts. Most 600- 750 lb. cattle were calves at this sale. Demand was called moderate for all classes with buyers being very selective on which lots were purchased. Rains fell early last week with some areas receiving up to two inches, while others saw very little. In Joplin, MO, Compared to the previous week, steers sold $3-5 lower and heifers were $4-6 lower. Demand was called moderate to light on moderate supply. In Dodge City, KS, compared to the prior sale, feeder steers and heifers in the 350-700 lb. range were sharply lower, losing as much as $10-12. At this market, some fleshy and unweaned calves sold as much as $15 lower. The La Junta, CO, market last Wednesday sold steer calves $5-8 lower, with the exception of 400 to 500 lb. cattle, which were $10 lower. Heifer calves were $5-8 lower with some instances of as much as $10 lower. Yearling feeder steers and heifers were lightly tested in active trade on moderate demand. At the market in Bassett, NE, compared to the last sale, feeder cattle trended $5-7 lower despite good quality cattle through the market. Demand was called weak on offered lots. In Riverton, WY, compared with the previous week, steer and heifer calves were under pressure, trading $1-4 lower, with instances of as much as $5-6 lower. Yearling steers, on a light offering, were $2-3 lower, and heifers under 900 lbs. were $1-2 higher. In Billings, MT, compared to the prior week, steer and heifer calves were $3-6 lower. Calf demand was called light at the sale, mostly as a result of the sharply lower futures market, a drop in the fed cattle market, and higher cost of gain, according to reports. In Davenport, WA, compared to the previous week, feeder cattle were $5-7 lower on moderate trade and light to moderate demand. In Vale, OR, most all classes and calves were $2-5 lower on moderate trade and moderate demand. — WLJ

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